None of our M&As are done for ego or size: Anand Mahindra

Pankaj Mishra & R Sriram, ET BureauJun 29, 2010, 12.46pm IST

The Mahindra & Mahindra group has quietly emerged in the past few years as a major player in the global M&A game. Its various arms have sought to fill missing pieces in their strategic arsenal by buying niche, technology, aerospace and auto engineering firms. Anand Mahindra, vice chairman and managing director of M&M explains to ET in an exclusive interview how the various deals, including last month's buyout of Reva Electric Company, fit into the group's broader gameplan. Mr Mahindra, who visited Bangalore last weekend to finalise his group's investment plans for an aersopace venture, also elaborated on how close he is to building "globally competitive aircraft" from India. Excerpts:

In the past, you have talked about creating an Embraer out of India with Mahindra Aerospace. You also acquired two aerospace companies last year. How close are you to realising your goal?

Creating an Embraer out of India is a very good, one-liner for communicating what the ambition is because Embraer is a great role model. A developing country like Brazil which began this journey in aerospace manufacturing was no farther in technology curve than India was, and yet leveraged this aerospace venture both to build a new technology frontier for Brazil as well as built Brazil's brand on the world map. When you go around the world and you sit in an Embraer aircraft built in Brazil, your whole perception about an economy, a country, and its capabilities changes.

There are certain key things that are game changer in terms of changing perception, a space programme certainly does that for India and there is no reason why aerospace industry here can't do it. We can play our role in as far as India's aerospace development is concerned—that's where the Embrayer analogy. But ultimately you have to outgrow the analogy and just focus on your own goals. In fact, we have transitioned from that (mission). So I am going to be moving out of the Embraer analogy and simply say that we want to be the first private sector company to build globally competitive aircraft. And these are our first steps.

How much progress have you made so far?

Our approach is towards building an ecosystem. If I have to summarise it, the way to get into the aerospace business is not simply to build the aircraft but also be in the component business for a number of reasons. One, it gives you a tremendous technology underpinning, number two is that it's an immediate opportunity, brings in revenues both in terms of the export opportunity as well as the offset opportunity. But what we now need given our ambition is a larger facility for manufacturing both components as well as eventually an aircraft manufacturing facility—that's what we are shopping around for.

Are there some 'public sector' lessons as you work on this project?

Yes of course there are pitfalls, there are challenges and I wouldn't jump to judgement on them. But that's nice because you can learn from those lessons. So we should be not pardoned from making the same mistakes that the other people made in their journey.

Looking back at the Satyam acquisition, what have been the top lessons and achievements so far? To what extent have you been able to regain the trust of Satyam's customers?

Right on target is how I would describe it. When everybody asked me what has been your experience so far I say there are no surprises, if there have been any they were pleasant ones. The only unpredictable thing I guess was the Upaid settlement and you know the outcome of that, there's been some speculation, but the fact is that a settlement has been reached. So that was the only real thing hanging over the company.

There was every other analysis that we made of Satyam was something that you could track, you could evaluate as a risk and factor them in. So lot of people even on Twitter keep saying how do you take this risk—we took the risk because we calculated the risks. You said this could be the revenue after we take over, this could be number of clients retained, this is how long it will take to ramp back, and we did all that.